Flashback Friday… Cram Down

Last year I wrote a post about the dangers of Seller Financing.  The particular danger of a year ago hasn’t come to pass… but it hasn’t gone away, either.

Cram Downs

They aren’t the panacea that a lot of agents and others think they might be.  But, for sellers that are offering financing to buyers, cram downs are certainly a danger.

Take a look at the original post for a more thorough explanation of the dangers.

In general, we can expect higher interest rates (as with commercial properties and credit cards) if cram downs are allowed.  We can also look at higher down payment requirements and much stricter credit standards.  None of those are helpful to the real estate market… especially when it is already delicate.

For sellers, the danger is lost of capital.  They could actually end up losing part of the loan amount, not just a loss of interest payments.

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• FHA Changes On The Way… (lanebailey.com)
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• Flashback Friday… Cramming. (lanebailey.com)

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